Shane Ross (Independent)

I welcome the Minister. NAMA has been a very hard sell. This should be as non-political a debate as possible. Although I believe NAMA is wrong, the Government has approached it in a fairly non-political manner. It is genuine about the NAMA project and has not been as conscious of the political implications of its approach as it has been in other areas. This is welcome to those of us in the Independent benches.

If the Government had adopted a political approach, it would have done something different and a little more populist. The proof is that the two principal players or constituencies that will suffer as a result of NAMA are the developers and builders. It should be acknowledged that this is probably politically inconvenient for the Government. That it is also inconvenient for the taxpayer is probably even more inconvenient for the Government.

It should be acknowledged that the Minister has approached this matter in an extremely courageous way and has a grasp of detail that is as good as one could expect from any Minister for Finance. It is underlined by the fact that he has so few civil servants with him today. I doubt if any of them will be particularly worried that he went off script in his speech this morning. He did so very fluently.

It would be helpful if the political points were removed and we examined the legislation as coldly as possible. Those of us who do not believe NAMA will work must state quite clearly why it will not or why it is not the best solution. My saying the legislation is actually not a bailout for the bankers and builders will annoy Members who believe the opposite. It is a bailout for the bankers but not the builders. It will not work if it is a bailout for the builders. If the builders are to be relieved of some of their debts under NAMA, there is no possibility of it ever working. These are the people who are to be squeezed as much as possible, and rightly so.

There is no doubt the legislation is a bailout for the bankers. This is coded in everything the Minister and everybody else is saying. They do not use the term "bailout" because it is politically difficult for them to do so. However, in effect, the legislation is stating Ireland's banking system is bust and that we must do something about it. I find NAMA so difficult to accept not even because of the fact that the State is paying far too much for the assets but because it is such an incredible gamble in respect of what is to happen to assets. NAMA is nothing but a gamble with the assets and debt of the country. It is built on two principal assumptions, one being long-term economic value and the other being current market value.

It is when we talk of such concepts that we move into a fantasy world. The calculations made, which are all dressed up in complicated European Commission-type terminology, have all the characteristics of calculations made after having determined the result one wants in advance. That is a very easy thing to do, but it is quite complicated in mathematical terms if one wants to make it complicated. The Government is constantly talking about modest desires, such as an increase in asset values in the order of 10% in ten years, after which it believes everything will be alright. This is very modest. There is no earthly reason for believing property values will increase by 10% in ten years. I cannot believe anybody assume it so blandly. The only reason people make this assumption is that there has been an upward trend on the graph historically. However, there is a very fast downward trend at present. The result is that the Government has picked a point somewhere on the graph and stated current market values are to be determined on that basis. The indications are that the current market values, as estimated by the Government, are far too high.

It is virtually impossible to know what current market values are. In many cases, they are zero. The Government's assumption in this regard has all the features of backward calculation. Once one creates a base for current market value, one adds a figure to determine what is called long-term economic value. This leads one into a fantasy world in which one says all will be okay on the grounds that what one has predicted will happen in ten years. I do not believe this.

If I were asked what I believe property values will be in ten years, I would say they will be lower than they are at present, given that one can say what they are at present. The Government would say the opposite. I have not a clue whether I am right or wrong, nor does the Government. Therefore, the values we are deciding upon are false, make-believe values, yet the most important Bill ever to be considered in a Seanad of which I have been a Member is based on utter fantasy. This is very dangerous. I can understand why the Government is doing this and why it is necessary, and I can understand how desperate it is, but its figures are not in any way realistic or provable.

I have always felt the nationalisation route is correct. I do not know what the cost would be, nor does anybody else, just as we do not know what the cost of NAMA will be. Nationalisation has one or two features that are preferable to the NAMA model, one of which is the idea of certainty. The first reason it would be better to take the nationalisation route is because it would finally force us to believe the State is more powerful than the banks. What we have seen during the consideration of the NAMA proposal is that the banks have continuously had the Government on the back foot. Nationalisation should put an end to that.

During the Order of Business this morning, I stated AIB has come forward with a solution, or supposed solution, which appears to have been agreed by the Department of Finance, to end confrontation with the Government over who should be the next chief executive. AIB is the third or fourth bank that has appointed an insider to take over, even at this critical time. The last thing we want is insiders in the banks. NAMA will allow the banks a degree of independence that they do not deserve. We have seen this pattern already. We saw it in the case of Bank of Ireland, where the Minister skilfully and rightly removed the governor and chief executive. The governor was replaced by a Bank of Ireland lifer who had returned. While he may be a talented man, he is deeply imbued in the bank's ethos. The heir apparent of the deposed chief executive took over, an insider appointed in a big hurry within a few weeks.

When the chief executive and chairman of AIB resigned, there was an immediate appointment of a chairman from inside the board. An announcement on the appointment of a chief executive has not yet been made; therefore, it is not too late for the Minister to change his mind, but there has been a stand-off between him and AIB for six months on who should be the chief executive. Apparently, there is a so-called compromise that, as I stated on the Order of Business, is unacceptable for two reasons. First, the candidate is an insider from the board, the chairman. Second, he is defying all of the rules of corporate governance. The situation is worse than it used to be, as there would be an executive chairman who would have too much power. Our problem with some of the banks was that men had too much power. It was almost as if they were running little feudal kingdoms. This should not be allowed.

I am not normally an advocate of nationalisation, but the banks are a crucial part of the economy and are in a bad way. Presumably, nationalisation would give the Government the power to overturn the banks which are retrenching and winning a power game. This is an important matter. The Government is right - we cannot let the banks go bust. We must rescue them, but we must do so on our terms, not theirs. With NAMA, we seem to be doing all of the good in bailing them out, but we are giving them autonomy they do not deserve. Unfortunately, nationalisation would be a better solution in this regard. If the Opposition is genuine about tackling the problems of small businesses, nationalisation might help for a period, about which the Opposition is right. However, the banks are defying the Government on the issue of small business loans. I read the formula in one of the banks' published documents on an agreement between them and the Government. Although I cannot remember the words, it stated they had agreed on the availability of more loans for small businesses. That was meant to be a concession. The loans were available, but only on terms that were impossible for small businesses to accept. They were unacceptable because the terms were penal or difficult. There was wordplay. The banks stated they would make loans available because the Government wanted them to do so, but no one was able to take them up.

These guys need direction and to be dictated to. Every time they are let off the leash, they come back and outplay the Government at this game. They have done it for decades and will continue doing so. In NAMA there is no mechanism for restricting them in these activities. In their current form, banks are not fit to appoint their own boards and should not be allowed to do so. History teaches us that they form clubs, pay themselves too much and do not perform any exercise in lending to small or other businesses which need money. They maintain that they do not lend to small businesses because they are not creditworthy. Nationalisation would have been preferable because it need not have lasted forever. We could have placed the banks in State ownership for a time with the express intention of refloating them. If they had been nurtured properly and started to make profits, there would have been no reason not to refloat them. It would have been a simple and practical measure like putting an invalid into a convalescent home. As everyone accepts, it would also have removed our terrible pricing problem. The real objection to NAMA, as identified by the Minister and which sickens him to keep hearing-----